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Friday, September 29, 2006

No plans for IPO: LIC

Life Insurance Corporation on Thursday ruled out any plans for initial public offer, IPO, saying any such plans require amendment in the LIC Act, reports The Economic Times.

"Coming out with an IPO would require amendment in the LIC Act and LIC would have to be converted to a company instead of corporation. There are no such plans," LIC chairman T S Vijyan told reporters on the sidelines of its golden jubilee celebrations.

There were some speculations that the largest insurer may come out with an IPO to raise money.

The LIC chairman also said that the corporation will meet from its own resources the requirement of Rs 7,000 crore (Rs 70 billion) to increase its solvency margin to 150% in the next two years from the current 130%.

Vijayan said it would invest 8-10% of its incremental income in the equity markets, but the pattern of investment may change as per the customers’ preferences in unit-linked products.

"As per the current investment pattern, we have decided that of all our incremental income, 8-10% would be invested in the (equity) markets," he said.

However, if the components of unit-linked products are more in new policies, this calculation would not hold much water, he said.

"If large customers in ULIP opt for debt products, there is no equity in that," he said, adding that in the days of growing popularity of unit linked products it is hard to say in advance about the investment pattern.

Only a small portion of the corporation's total premium income is coming from new policies, he said. Last year, only Rs 18,000 crore (Rs 180 billion) was brought as first premium of the total income of over Rs 90,000 crore (Rs 900 billion), he said.

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